View of part of the Fujairah Corniche and the Hajar Mountains in the Background

Saturday, August 1, 2009

Establishing a Business in the UAE

This article is from the UAE Embassy in Washington DC web site and appears designed to advise prospective residents how they might set up a business in the Emirates.

N.B. The article is likely to be altered and updated in the months to come so please check the above link to obtain the most current version.

In the UAE, regulation of the establishment and conduct of businesses is shared at the federal and emirate levels. There are two paths for doing business in the UAE: through joint partnerships or through a Free Zone.

Joint Partnership
In order to establish a business that sells products or services freely throughout the UAE, at least 51 percent of the business must be owned by a UAE national. (Forming this type of joint partnership is the best and easiest way to establish a business in the UAE.) All businesses require a license and licensing procedures vary from Emirate to Emirate. Specific information is available at individual Chambers of Commerce:
Abu Dhabi Chamber of Commerce and Industry
Ajman Chamber of Commerce
Dubai Chamber of Commerce and Industry
Fujairah Chamber of Commerce and Industry
Ras Al Khaimah Chamber of Commerce and Industry
Sharjah Chamber of Commerce and Industry
Umm al-Qaiwain

For more detailed contact information for these offices, please visit the Resources page.

Free Zones
Establishing a business entity in one of the numerous UAE Free Trade Zones (FTZs) can be an attractive option for foreign investors and businesses. All seven Emirates already have, or are developing, such economic zones.

The major advantages in operating in a free zone are:
* 100 per cent foreign ownership of the enterprise
* 100 per cent import and export tax exemptions
* 100 per cent repatriation of capital and profits
* No corporate taxes for 15 years, renewable for an additional 15 years
* No personal income taxes
* Less burdensome documentation, mostly in English
* Assistance with labor recruitment, and additional support services such as sponsorship and housing.

There are over 20,000 companies in 21 Free Zones around the UAE.

The largest Free Zones, by number of companies, are the following:
* Jebel Ali Free Zone (6,000 companies)
* Sharjah Airport International Free Zone (3,900 companies)
* Dubai Airport Free Zone (1,300 companies)
* Dubai Media City (1,200 companies)
* Dubai Internet City (1,000 companies)

An independent Free Zone Authority (FZA) governs each free zone and is responsible for issuing FTZ operating licenses and assisting companies with establishing their business in the FTZ. Investors can either register a new company in the form of a Free Zone Establishment (FZE) -- a limited liability company governed by the rules and regulations of the Free Zone in which it is established -- or simply establish a branch or representative office of their existing company based within the UAE or abroad.

The procedures for establishing a business in a Free Trade Zone are usually very straightforward and can be completed in a short space of time, especially if there are no environmental issues involved. Individual Free Zones may have specific requirements, but general steps are:
* Questionnaire from the relevant Free Zone Authority which will assist in assessing a company's requirements
* License application, planning documents, and a consumer request for electricity
* Provisional approval and lease agreement
* Meetings with the authority to finalize details of the project
* Licenses

Once a legal presence has been established in the Free Zone, the business will need to lease premises or land and acquire an operating license from the FZA. Different types of licenses apply in the different types of free zone, however, it is important to understand that companies with trade and industrial licenses can only conduct business within the Free Zone or abroad. To sell products in the UAE, a UAE official agent is required, and a joint venture needs to be formed.

When not to choose a Free Zone
There are a few scenarios in which a prospective company might not want to choose to do business in a Free Zone, and should instead opt for a regular joint partnership. These are if a company:
* Practices a regulated profession
* Requires a lot of visas or warehouse/office space
* Plans a long presence in the UAE and wants to reach a wider portion of the UAE market
* Has a particular UAE company or individual with which to partner

Key Industries
Sectors with strongest demand and opportunity include:
* Construction services
* Materials and supplies
* Defense – Aerospace
* Energy – Alternative Energy
* Professional services
* Select tourism products/services
* High end hotel brands
* Creative/profitable arts and culture entertainment products
* High end, strongly - branded medical service providers and cutting edge products

Establishing a Business [in the UAE], UAE Embassy in Washington DC web site, Created 1 January 2009. Last updated 15 April 2009.

As indicated above, this article has already been altered and is likely to be updated in the months to come so please check the above link to obtain the most current version.

Don’t They Know It’s Friday? By Jeremy Williams, RBM, 6 June 2008.
Essam Al Tamimi, Setting Up in Dubai- a Review, RBM, 26 December 2007.

Dr Geoff Pound

Geoff can be contacted by email at geoffpound(at) on Facebook and Twitter.

Image: Doing Business in the UAE.